Though travel and cruise stocks have yet to return to their pre-Covid-19 levels, 2024 may be the year of vacations. According to U.S. cruise operators and travel agents, travelers have booked record levels of cruise tickets, surpassing 2019’s numbers. This marks a return of interest and trust in the cruise ship industry after pandemic-era controversies.
However, not all cruise lines are created equal, with some achieving returns to profitability faster than others. Moreover, with the industry’s revenue projected to hit $30 billion in 2024, cruise line stocks could become lucrative investment opportunities. For investors, there are two major factors to look for when considering cruise stocks.
The first is overall financial health, which is measured by the company’s debt-to-income ratios and revenue costs. With cruise ships being expensive to procure, own and operate, many cruise lines don’t have the widest margins. The second is the cruise line’s reputation for value, service and quality. Cruises tend to be expensive forms of vacation for most travelers, meaning that reputation is everything for increasing revenue over time.
Norwegian Cruise Line Holdings (NCLH)
With a congregation of three award-winning brands across a combined 32 ships, Norwegian Cruise Line Holdings (NYSE:NCLH) has been making a steady comeback since 2022. Because its vessel sizes range from 500 to over 4,000 berths, the company has a ship for every itinerary type.
Moreover, to remain competitive, NCLH consistently introduces new vessels alongside the revitalization of older ones. By continuously enhancing offerings, the company believes it will be able to satisfy customers and entice them into coming back. This is meant to support profitability even as prices rise with operating costs. NCLH pairs this improvement focus with the high-class reputation of its brands to maximize revenue generation.
So far, it seems this business model has been working for NCLH as the cruise industry recovers. For example, the company raised total annual revenue by $3.7 billion in 2023 to $8.5 billion, up from $4.8 billion in 2022. Though it’s still operating at a loss, record bookings and interest in cruises could boost the stock after its next earnings call.
Royal Caribbean Cruises (RCL)
Renowned for its innovative approach to cruising, Royal Caribbean Cruises (NYSE:RCL), the world’s second-largest cruise line, has built significant momentum in the last year. Thanks to tremendous demand and 2023 being an exceptional year, RCL stock has returned to its pre-pandemic trading rate of $135, and is still growing.
For the full year of 2023, the company reported a positive net income of $1.7 billion, translating to $6.31 per share. This is impressive considering its biggest competitor, Carnival Cruise Lines (NYSE:CCL), is currently reporting losses per share. Moreover, it has reported the five best booking weeks in company history since its Q3 2023 earnings call.
Much of this generous growth can be attributed to the cruise line’s strong marketing and reputation for good value. It earned this reputation by focusing on providing the widest array of experiences for customers while maintaining quality standards.
Lindblad Expeditions Holdings (LIND)
A premium provider in the world of cruises, Lindblad Expeditions Holdings (NASDAQ:LIND) operates a different kind of travel experience. By specializing in nature expeditions partnered with National Geographic, LIND appeals to adventurous travelers. As such, it markets itself to those with a desire to see the remote parts of the world in style.
Charting voyages to and around Antarctica, LIND’s target market is vastly different from other cruises. That’s because it offers more one-of-a-kind experiences to wealthier people than the major cruise companies. This makes it somewhat of a black sheep among cruise stocks, as its growth relies on consumers with niche interests rather than the sheer volume of classic cruise ships.
The company also operates a diverse mix of land-based itineraries, as well as charter flights across the Drake Passage to Antarctica. This portfolio allows LIND to command the attention of explorers and tourists alike, as it has few competitors in the commercialization of Antarctica.
On the date of publication, Viktor Zarev did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.